Question

For Practice Only

Wilson Publishing Company produces books for the retail market. Demand for a current book is expected to occur at a constant annual rate of 7,400 copies. The cost of one copy of the book is $14.5. The holding cost is based on an 17% annual rate, and production setup costs are $145 per setup. The equipment on which the book is produced has an annual production volume of 24,000 copies. Wilson has 250 working days per year, and the lead time for a production run is 17 days. Use the productior lot size model to compute the following values: a. Minimum cost production lot size. Round your answer to the nearest whole number. Do not round intermediate values. b. Number of production runs per year. Round your answer to two decimal places. Do not round intermediate values. Number of production runs per year = c. Cycle time. Round your answer to two decimal places. Do not round intermediate values. .) T = days d. Length of a production run. Round your answer to two decimal places. Do not round intermediate values. Production run length = days e. Maximum inventory. Round your answer to the nearest whole number. Do not round intermediate values. Maximum inventory = f. Total annual cost. Round your answer to the nearest dollar. Do not round intermediate values. Total annual cost = $ g. Reorder point. Round your answer to the nearest whole number. Do not round intermediate values.

Answer 1

Soli Given, Demand = 7,400 copies cost of one copy of 14.5 = 2.465 Annual rate = 17% Production setup costs = 145 annual production volume - 24,000 Working days head time production per year = 250 run= 17 days demand Annual = 29.6 7400 250 Daily demond (d): days No. of working 24,000 production Annaal 96 Daily production (p) = 2.50 No. of cooking days (9) Minimum cost production lot size 2x Demmd x Set up costo ' Holding cost X ( 1 - 2 / 2x74000 145 2,146,000 1 7049583333339 2.465 - 29.6 = V1,258,681.7859673 = 1,121.9098831756/1

in No. of production runs per year Annual demand (D) productiontion quantity (0) -7400 121.9098831756 - 6 595895) 68/7/5, Cycle time Production quantity (a) Daily demand (d) C 121.9098831756 29.6 = 37.90 2360918094, (d) Length of production run Production quantity 18) Douly production (p) = 1121.9098831756 96 - 11. 68656/283079, e) Maumun = inventory (-) 29.61 - 175.96766919649 1721.9098831754 96

I t Total annual cost cost & Annual setup cost Annual holding - [6) (H) (-))+ (248 = 12). 709831754 ( 2.465) ('-276)] + [ 21.609643756 145) 1121.9098831756 29.6 165) 1400 1121.9098831756 96 956.40480 228467 + 956.40480228486 1912.809604569511 19 Reorder point head time i = Daily 29.6% demond x 17 = 503.21